Cape Girardeau, MO - Irvin R. Eddington, Jr. was sentenced Monday afternoon to 57 months in prison on bank fraud and embezzlement charges involving his issuance of fraudulent letters of credit while he was Vice President and Manager of the Ellington Branch of People’s Community State Bank (PCSB). In addition to the prison sentence, he was ordered to pay restitution of $1,195,696.

From February to October 2011, Eddington created fraudulent PCSB money orders funded by advances from customer lines of credit to obtain cash or pay his bills. In order to execute his scheme, he would issue money orders payable to a bank loan customer or to a creditor and endorse by forging the customer's name. In each instance, Eddington misrepresented to the teller that the customer had been in earlier that day, endorsed the money order and he was handling the transaction in the customer's stead. In order to evade detection by customers, he used lines of credit from customers who he knew did not monitor their loan histories and who did not have access to their account online. In order to further evade detection, he would sometimes deliberately not mail the customers he targeted their bank statements.

From January 2004 through October 2011, Eddington created and issued numerous fraudulent unsecured irrevocable letters of credit to an associate in the name of PCSB worth approximately $1,340,896. He did not have authority to issue any of these letters of credit and did so without the knowledge or permission of the bank. Unbeknownst to PCSB, this associate then secured loans from other entities using the irrevocable letters of credit as collateral. The associate kept and used the funds derived from those loans leaving PCSB responsible for the balance in the instance of a default. Contrary to his fiduciary duty as a bank Vice President to disclose all letters of credit issued by him, Eddington deliberately failed to discuss the unauthorized letters when the subject was discussed at bank board meetings. The total value of the letters of credit issued and thus the potential loss to the bank for this scheme, was approximately $1,340,896, however, based on loan defaults to date, PCSB is liable for approximately $674,336.

Besides the conduct described above, Eddington also admitted to perpetrating additional fraudulent schemes on PCSB. On March 11, 2010, Eddington, in an effort to circumvent Federal Reserve regulations governing insider lending to bank officers, approved a nominee loan to two customers of the bank for $45,000. He reported the loan to PCSB; however, did not report he was receiving the proceeds of the loan. The loss to PCSB for this scheme was $58,500.

On August 4, 2011, the PCSB Loan Committee approved a $249,000 loan to an associate of Eddington. He misrepresented collateral for the loan by providing a fraudulent title insurance policy as part of the loan application. Finally, when the $249,000 loan was presented for approval, Eddington failed to disclose that the associate would receive $56,114 cash from the loan proceeds. The Loan Committee would not have approved the loan had they known that the loan was "secured" by different property, the lack of title insurance and the cash payout to the borrower.

IRVIN R. EDDINGTON, JR., Ellington, MO, pled guilty in February to one felony count of bank fraud and one felony count of embezzlement by a bank employee. He appeared Monday afternoon for sentencing in Cape Girardeau before United States District Judge Carol E. Jackson.

This case was investigated by Federal Deposit Insurance Corporation-Office of Inspector General, U.S. Postal Inspectors, U.S. Department of Agriculture-Office of Inspector General, U.S. Secret Service, Federal Housing Finance Agency-Office of Inspector General. Assistant United States Attorney Stephen Casey handled the case for the U.S. Attorney’s Office.